Earnings Management and Forecast Guidance as Mechanisms to Meet or Beat Analysts' Earnings Forecasts

2005 ◽  
Author(s):  
Lixin (Nancy) Su
Keyword(s):  
Earnings Management ◽  
Earnings Forecasts ◽  
Forecast Guidance

Earnings Management, Forecast Guidance and the Banking Crisis

2011 ◽  
Author(s):  
Elena Beccalli ◽  
Saverio Bozzolan ◽  
Andrea Menini ◽  
Philip Molyneux
Keyword(s):  
Earnings Management ◽  
Banking Crisis ◽  
Management Forecast ◽  
Forecast Guidance

Market Reaction to Abnormal Inventory Growth: Evidence for Managerial Decision-Making

2021 ◽  
Author(s):  
Kirsten A. Cook ◽  
G. Ryan Huston ◽  
Michael R. Kinney ◽  
Jeffery S. Smith
Keyword(s):  
Earnings Management ◽  
Management Strategy ◽  
Earnings Forecasts ◽  
Manufacturing Firms ◽  
Fixed Costs ◽  
Managerial Decision ◽  
Managerial Decision Making ◽  
Investor Confidence ◽  
Analyst Earnings ◽  
Market Premium

Prior research demonstrates that manufacturing firms increase production (relative to sales) to transfer fixed costs from cost of goods sold (COGS) to inventory accounts, thereby increasing income to reach or surpass earnings thresholds. We examine how the market reacts to this earnings management strategy. We find that investors respond positively to inventory growth based on an expectation of increased future sales; however, this signal is weaker for inventory manipulators. Further, the market premium from meeting or beating analyst earnings forecasts by manipulating inventory is smaller than the premium for achieving this threshold absent inventory manipulation or through accrual manipulation. Finally, we examine firms considered to be “serial” inventory manipulators, finding that the market consistently discounts earnings beats for these firms, suggesting that inventory manipulation erodes investor confidence in firms’ earnings. Collectively, our results provide new insights into a challenge facing operations managers and finance managers in manufacturing firms.

Earnings Management: New Evidence Based on Deferred Tax Expense

2003 ◽  
Vol 78 (2) ◽  
pp. 491-521 ◽  
Author(s):  
John Phillips ◽  
Morton Pincus ◽  
Sonja Olhoft Rego
Keyword(s):  
Earnings Management ◽  
Earnings Forecasts ◽  
Evidence Based ◽  
Taxable Income ◽  
Abnormal Accruals ◽  
Deferred Tax ◽  
New Evidence ◽  
Tax Expense

We assess the usefulness of deferred tax expense in detecting earnings management. Assuming greater discretion under GAAP than under tax rules, and assuming managers exploit such discretion to manage income upward primarily in ways that do not affect current taxable income, then such earnings management will generate book-tax differences that increase deferred tax expense. Our results provide evidence consistent with deferred tax expense generally being incrementally useful beyond total accruals and abnormal accruals derived from two Jones-type models in detecting earnings management to avoid an earnings decline and to avoid a loss. Only total accruals is incrementally useful in detecting earnings management to meet analysts' earnings forecasts. Deferred tax expense is more accurate than the accrual measures in classifying firm-years as successfully avoiding a loss, whereas no one measure is more accurate in classifying firm-years as avoiding an earnings decline or meeting analysts' forecasts.

Bloated balance sheet, earnings management, and forecast guidance

2012 ◽  
Vol 11 (2) ◽  
pp. 120-140 ◽  
Author(s):  
Li‐Chin Jennifer Ho ◽  
Chao‐Shin Liu ◽  
Bo Ouyang
Keyword(s):  
Earnings Management ◽  
Balance Sheet ◽  
Forecast Guidance

Earnings management, forecast guidance and the banking crisis

2013 ◽  
Vol 21 (3) ◽  
pp. 242-268 ◽  
Author(s):  
Elena Beccalli ◽  
Saverio Bozzolan ◽  
Andrea Menini ◽  
Philip Molyneux
Keyword(s):  
Earnings Management ◽  
Banking Crisis ◽  
Management Forecast ◽  
Forecast Guidance

Earnings management or forecast guidance to meet analyst expectations?

2009 ◽  
Vol 39 (1) ◽  
pp. 3-35 ◽  
Author(s):  
Vasiliki E. Athanasakou ◽  
Norman C. Strong ◽  
Martin Walker
Keyword(s):  
Earnings Management ◽  
Analyst Expectations ◽  
Forecast Guidance

The Effect of Earnings Forecasts on Earnings Management

2002 ◽  
Vol 40 (3) ◽  
pp. 631-655 ◽  
Author(s):  
Sunil Dutta ◽  
Frank Gigler
Keyword(s):  
Earnings Management ◽  
Earnings Forecasts
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